Madagascar Overview

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Madagascar overview

About Madagascar, Africa

Madagascar map

Madagascar is located in the Indian Ocean approximately 400km off the east coast of Mozambique, south eastern Africa. The nation is the fourth-largest island in the world. Madagascar's topography is characterised by a mountainous central plateau and surrounding coastal plain. The climate is diverse with tropical rainforest in the east, savannah grassland in the center and west.

The population of Madagascar is increasing and in 2020 is estimated by the United Nations to be approximately 27.8 million. Similar to most sub-Saharan African countries, the population is young with a median age of 18.7 as of 2015.  35 percent of the population are estimated to live in urban areas.

The system of company and corporate law in Madagascar is now similar to that found in any other French-speaking country. Since the new Companies Code was implemented in 2004, the procedure for setting up and operating companies has become much simpler.

Mining in Madagascar

Rio Tinto and the Sumitomo-Korea Resources-SNC-Lavalin consortium are the largest investors in the mining sector in Madagascar with the 2006 Fort Dauphin mineral sands and 2010 Ambatovy laterite nickel developments respectively. Both are large scale long life operations which required in-country investments of approximately US$900 million and US$7.0 billion respectively.

After several years of discussion and consultation with the mining industry, both Houses of the Malagasy Government passed the Revised Mining Code into law on 7 June 2023. Following a review for Constitutional and Legal implications of the Mining Code, the President of Madagascar declared the Mining Code approved on 27 July 2023.

This significant event occurred following the Malagasy Council of Ministers approving the Ministry of Mines and Strategic Resource to resume processing applications for all mining permits on 30 March 2023 (AKORA - ASX Announcement 4 April 2023).

The Implementation Rules will now be prepared and these Rules will enable exploration and mining companies to understand how to progress against the Revised Mining Code. When these Implementation Rules become available the company will provide commentary on how they influence AKORA.

Changes in the Revised Mining Code that the company currently understand are that the mining royalty will increase from 2 to 5% - this compares to a 7.5% royalty for Direct Ship Iron Ore in Western Australia. The revised Mining Code states that when transformation/upgrading of the mined product occurs, within Madagascar, then the royalty reduces from 5% to 3.5%. Our present understanding of ‘Transformation’ of a mineral substance means that all operations that give mineral substances a different appearance than the original, or to modify their chemical or mineralogical composition, in order to valorise them. The degree of transformation will need to be confirmed once the particular Implementation Rule is announced. For comparison, the royalty in Western Australia for upgrading iron ore to a higher grade concentrate is 5%.

The corporate income tax rate in Madagascar is 20%.